For those ultra-urgent shipments when next flight out is the only option. Perfect for your expedited freight when there's a deadline which cannot be missed. With the fast and competitive business environment today, effective supply chain management is no longer a competitive advantage — it is a necessity. This is where a Third Party Logistics (3PL) provider comes in. Companies outsource their logistics and transportation operations to 3PLs so that they can save on cost, don't have to worry about distribution, and have more time to spend focusing on their business.
Whether you are a small e-commerce seller or multimillion-dollar manufacturer, being more aware of how 3PL logistics services work will give you the advantage to meet customer expectations and develop growth sustainably. This guide will provide an overview into what 3PL is all about, discuss the benefits of using 3PL services, review the typical services offered, highlight some challenges faced when using a 3PL provider, and conclude with tips for choosing a 3PL provider.
Third Party Logistics (3PL) is when a business spends part or all of their logistics and supply chain operations to an outside company. These companies are focused on managing resources such as:
Ultimately, a 3PL is a middle link between business and customer so that they can get their products stored, picked, packed, and delivered.
Companies look to 3PLs to save time, reduce costs, and scale to meet customer demand without creating their own logistical networks. Aspects worth considering, 3PL providers provide:
No incur expenses for warehouses or hiring an in-house logistics team
3PL providers typically utilize complex technologies such as WMS (Warehouse Management Systems) and monitors shipment in real-time
When companies experience seasonal demand, they can meet customer demand without stressing employees and operations
Companies can benefit using 3PL network internationally, and various customs clearance support
Allowing the business more time to spend on product development, sales and marketing
Third-party logistics, or 3PL, companies store your goods in strategically located warehouses, which reduces delivery times and costs.
3PLs manage freight forwarding, route planning, and negotiating carriers for domestic and international transportation.
Fulfillment centers fulfill orders, from picking and packing to shipping them quickly and accurately.
Inventory management allows for real-time tracking, demand forecasting, and inventory levels optimization to avoid running low or overstocking.
3PLs also handle returns and exchanges and disposal or recycling, which increases customer satisfaction.
Your online store or ERP software will have seamless integration with the software of the 3PL partners.
You will send your products to the 3PL's warehouse(s).
When a customer orders the product you sell, the 3PL will get the order.
The product will be picked by the 3PL team, packed and secured, then readied for shipping.
The 3PL will make a decision on the carrier and the best method of delivery.
Customers will receive updates with tracking info, and return processes will be smooth.
Although a 3PL provider provides logistics services, Fourth Party Logistics (4PL) companies assist organizations with the entire scope of the supply chain, which includes multiple 3PLs, procurement, and strategy.
| Aspect | 3PL (Third Party Logistics) | 4PL (Fourth Party Logistics) |
|---|---|---|
| Focus | Tactical, operational (storage, transportation, fulfillment) | Strategic, end-to-end supply chain |
| Scope | Specific logistics services | Complete supply chain management |
| Management | Direct service provision | Manages multiple 3PLs and suppliers |
When selecting a third-party logistics partner, consider:
Always request references and visit their facilities before signing a contract.
The 3PL space is changing with trends like:
Companies that align with modern 3PL providers and leverage new technologies and solutions will be best positioned to compete in today's digital-first landscape.
Logistics outsourcing through Third Party Logistics (3PL) can give your company the tools it needs to streamline and optimize its supply chain, enhance customer service levels, and identify new markets with no financial burden of having to invest in infrastructure. Understanding a 3PL's value proposition, how they function, and finding the right 3PL can create peace of mind so that you can spend time focusing on growing your brand while letting the specialists manage logistics.
If you are looking for a trustworthy provider with specialization in warehousing, transportation, and supply chain management, SKL Group is a provider of end-to-end 3PL services relevant to your company's supply chain. With our logistics expertise, state-of-the-art facilities, and excellence in logistics service & efficiency, we are an ideal partner for any company whose objective is to grow.
Third-party logistics (3PL) is when you contract out some or all of your logistics operations – either warehousing, order fulfilment, transportation, and/or inventory management - to a 3PL provider. 3PL companies help companies streamline their supply chain, cut costs, and enhance delivery times.
Most 3PL providers offer warehousing and distribution, transportation management, order fulfilment, inventory management, reverse logistics, and freight forwarding. Some companies also provide value-added services such as packaging, labeling, and customs clearance for international shipping.
For e-commerce sellers, a 3PL logistics company will store the sellers' products in its warehouse, integrate with the sellers' online store, and ship the picked, packed, and shipped orders directly to the buyer. It is a time saver for sellers and reduces the retailers' overhead costs while improving shipping and delivery times.
A 3PL only assists you with specific logistics functions like warehousing and transportation, but a 4PL provider is in charge of all logistics in the supply chain and the 4PL provider is responsible for the strategy that will include creating the plan to identify, prioritize, resource, coordinate, and continue managing various 3PLs. To clarify, 3PL is tactical, and 4PL is strategic.
SKL Group can provide effective third-party logistics services with well-developed warehousing operations, efficient transportation operation, and dedicated customer service support. Our supply chain solutions are tailored according to your industry and will scale as your company grows to ensure your supply chain is running timely, smoothly and with the cheapest possible methods.